India ranks among the world’s fastest-growing economies, supported by a rapidly expanding middle class and rising retail consumption. Retail contributes nearly 10 percent to India’s GDP and employs around 50 million people, both directly and indirectly. It is the fastest-growing employment sector and second only to agriculture in direct job creation.
The Indian retail market, valued at approximately USD 1 trillion, is expected to reach USD 2 trillion by 2032. Beyond economic impact, modern retail improves transparency, increases tax compliance, and boosts government revenues. The Retailers Association of India (RAI) strongly aligns with the Government of India’s vision for inclusive and sustainable growth. Through its Budget 2026–27 recommendations, RAI outlines policy measures to unlock retail’s full growth potential.
Key Recommendations at a Glance
RAI urges the Government to:
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Treat retail as a long-term growth driver
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Focus on demand- and consumption-led growth
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Increase disposable income through tax relief
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Recognise F&B retail as a priority service
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Fast-track the National Retail Policy
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Extend full MSME benefits to retail traders
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Promote digital payments through MDR relief
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Support technology adoption among MSME retailers
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Offer enhanced depreciation on capital investments
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Reintroduce the EPCG Scheme for retail infrastructure
Boost Consumption and Retail Growth
RAI recommends that the Union Budget prioritise demand stimulation. Lower personal income taxes and targeted reliefs can raise disposable income and improve consumer sentiment. Consumption-led growth will also create multiplier effects across sectors.
The Budget should further support retail through simplified regulations, skill development programmes, rationalised GST norms, and growth-oriented policies that improve ease of doing business.
Improve Access to Affordable Finance
High borrowing costs continue to challenge MSME retailers and independent traders. RAI proposes low-interest financing options supported by a dedicated retail finance scheme through SIDBI. It also recommends creating a special fund for retail MSMEs and easing select lending norms to expand credit access.
Strengthen Digital Payment Adoption
Digital payments, particularly UPI, have transformed retail transactions, especially in semi-urban and rural markets. To accelerate adoption, RAI suggests encouraging payment innovation, promoting low-cost digital options, and waiving MDR on debit card transactions. These steps can reduce cash dependence and improve transparency.
Recognise F&B Retail as an Essential Service
RAI calls for Food and Beverage retail to be recognised as a priority and essential service. It recommends preferential land rates, utility subsidies, and policy support similar to other essential sectors. This recognition can strengthen food security, employment, and consumer access.
Fast-Track the National Retail Policy
RAI urges swift implementation of the National Retail Policy. A unified framework can reduce regulatory complexity, improve ease of doing business, attract investment, and support both organised and traditional retail formats.
Extend Full MSME Benefits to Retailers
Although retail and wholesale traders qualify for MSME registration, their benefits remain limited. RAI recommends extending all MSME benefits to retail and wholesale traders on par with other sectors.
Enable Technology Adoption Among MSMEs
Technology adoption is critical for retail modernisation. Point-of-sale systems can improve inventory control, reduce pilferage, enhance billing transparency, and support customer engagement. RAI suggests subsidised POS systems, certified hardware and software, and built-in audit trails to support small retailers.
Encourage Adoption of the Model Shops Act
The Model Shops and Establishments Act, 2016 allows 24×7 operations and supports employment growth. RAI recommends incentivising states to adopt the Act. It also proposes free or subsidised EDC machines and cost parity between digital payments and cash handling.
Reintroduce EPCG Scheme for Retail
To support modern retail infrastructure, RAI proposes reintroducing the EPCG Scheme for eligible retailers. The scheme should offer concessional duties on imported capital goods for stores with a minimum area of 1,000 square metres.
Conclusion
With targeted policy support, the retail sector can accelerate consumption, employment generation, and economic formalisation. RAI reiterates its commitment to working closely with the Government to strengthen India’s retail ecosystem and drive long-term, inclusive growth.
